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The Federal Deposit Insurance Corporation (FDIC) has recently concluded the formulation of new regulations that specifically pertain to the use of its official name and logo in financial promotions.
FDIC Extends to Digital Channels
In a December 20 press release, the FDIC Board of Directors announced the adoption of a final policy to amend part 328 of its regulations, aimed at modernizing the framework governing the use of its official signs and advertising statements.
Today, our Board of Directors adopted a file rule to amend how financial institutions use our official logo. Beginning in 2025, banks will be required to display an FDIC digital sign near the bank’s name on all websites, mobile apps and certain ATMs.https://t.co/2IaSvOwAkt pic.twitter.com/KuHbIMveim
— FDIC (@FDICgov) December 20, 2023
The corporation highlighted that the last significant update to its sign and advertising rules occurred in 2006. The announcement clarified the FDIC’s stance on false promotion, branding misuse, and misrepresentations of deposit insurance coverage, issues commonly observed in traditional banks and crypto-centric institutions.
FDIC Chairman Gruenberg stated that the revisions enhance the certainty and confidence traditionally associated with the FDIC official sign, typically seen at bank branch teller windows.
This extension is intended to cover the digital channels that depositors increasingly use for their banking needs.
FDIC Chairman on the Final Rule to Modernize FDIC Official Signs:
“It is important to require a digital sign so that customers can confirm when they interacting directly with a bank rather than with a non–bank entity” https://t.co/xtmEkOlCD6
— Ken Tumin (@KenTumin) December 20, 2023
Since the 1930s, the black and gold FDIC official sign displayed at bank branch teller windows has symbolized assurance for bank customers, signifying the safety of their deposited funds.
Acknowledging the evolving landscape of banking, the modernization of these rules recognizes that customers now have various options for depositing money and accessing banking products and services.
The revised regulations ensure that the confidence associated with the FDIC official sign seamlessly extends to digital channels, including bank websites and mobile applications. This adjustment aligns with the changing ways in which depositors handle their banking transactions today.
The recently finalized rule introduces a new official digital sign in black and navy blue. Starting in 2025, banks must display this digital sign alongside the bank’s name on all websites and mobile applications.
Additionally, banks must display the FDIC official digital sign on specific automated teller machines.
New Rules Address Entities Misleading Customers
The revised rule primarily targets entities that may mislead customers into believing their funds are FDIC-insured.
Additionally, the final rule updates the criteria for displaying the official sign in physical bank branches and other locations, considering the evolving designs of these locations where customers make deposits.
This rule also requires signs across banking channels to differentiate insured deposits from non-deposit products.
To prevent misrepresentations of deposit insurance coverage, the final rule addresses specific scenarios where information provided by individuals, including non-bank entities, could mislead consumers.
It explicitly states that FDIC-associated terms or images cannot be used in marketing materials to falsely suggest that uninsured financial products or non-bank entities are FDIC-insured.
The amendments outlined in the final rule will become effective on April 1, 2024, with an extended compliance date of January 1, 2025.
Better Markets Reacts to FDIC New Rule
In response to the FDIC’s latest rule, Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets, emphasized that FDIC deposit insurance is the gold standard for trust, confidence, and protection.
Today the @FDICgov finalized a new rule that will help combat false advertising of FDIC deposit insurance. This is especially important given too many in the crypto industry have led investors to believe their money is protected by the FDIC, when it isn’t.https://t.co/nuN4MUDffK
— Better Markets (@BetterMarkets) December 20, 2023
However, Kelleher pointed out concerning trends in the cryptocurrency industry, where a widespread and misleading belief suggests that the FDIC safeguards funds invested in cryptocurrencies.
This misrepresentation harms individual investors and threatens the FDIC’s insurance program, the banks it covers, and the entire banking system.
The erosion of trust in the corporation, stemming from the false belief that cryptocurrency investments carry FDIC protection, is a significant issue.
As highlighted in Better Markets’ comment letter, negative events involving Gemini Earn, FTX US, and Voyager Digital have misled investors about FDIC insurance.
To tackle this problem, the CEO acknowledged that the FDIC’s new rule will prevent deceptive practices within the crypto industry. He views this legislative action as a proactive measure to counteract deceptive actions and extends his support and appreciation to the government corporation.
